Question regarding framing a basement wall

I'm soon to start my basement project (as noted with my lolly column removal thread). I went to a friends house yesterday to see how he was doing his walls. Seemed pretty straight forward as I thought but something caught my eye immediately and am curious about it.

As a typical build (here in VA at least), the unfinished walls are supposed to have insulation on them. He is building his walls and butting them right up on the insulation on the wall and then using kraft backed insulation between the studs. I thought that was a bit unusual.

I was just going to pull it all down and build from there.

Are there any pros/cons of doing it his way? I sure hate working with insulation so if I don't have to take it down...the better.